Sunday, 14 Sep, 2025
By: Anshul Vipat
The dip in PMI index echoes the current economic situation of the country. Apart from PMI, several other economic indicators have shown a slump in the economy. Image source: IANS
The primary reason behind the dip in industrial activity is weak external demand that weighed on overall sales, with international orders declining further in September
After gaining momentum since the past few months, India’s manufacturing sector activity has dipped again. The industrial activity for the month of September 2022 was the lowest in the past six months. This reflects that the economy is yet to recover from the global pandemic as well as geopolitical complications triggered by Russia-Ukraine war.
India's manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global fell to 54.3 in September from August’s 57.2. It was 56.4 in July and 53.9 a month before. Despite staying above the 50-mark separating growth from contraction for the fourteenth straight month – the longest stretch of expansion since October 2016 – the index fell to its lowest since March. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction. The readings are based on a monthly survey of businesses that are mainly into manufacturing activities.
The primary reason behind the dip in industrial activity is weak external demand that weighed on overall sales, with international orders declining further in September. In September, purchasing costs rose at the slowest pace in just under two years, while output charge inflation receded to a seven-month low . Also service providers reported a further increase in their operating expenses during September, owing to higher energy, food, labour and material costs. This also impacted the overall job creation, the survey noted. The service sector in particular created fewer jobs as compared to August.
There was also good news on the price front, as rates of both input cost and output charge inflation subsided, as per the survey. If we ignore the slight dip, Indian manufacturing production continues to grow at a steady pace post the pandemic. The future activity sub-index, which measures optimism that rose to its highest in almost eight years, giving hopes of brighter growth. New export orders also rose for the sixth successive month, and at the fastest pace since May 2022.
The dip in PMI index echoes the current economic situation of the country. Apart from PMI, several other economic indicators have shown a slump in the economy. Country’s inflation rate which had dipped to less than 7 percent for the first time in 2022 notched up to 7.1 percent in August, while Consumer Food Price Index (CFPI) jumped from 6.75 percent in July to 7.65 percent in August. This has forced the RBI to increase repo rate for the fourth straight time. RBI has admitted that retail inflation remains uncomfortably high and noted that inflation is expected to remain above 6 percent in the next quarter as well.
